After four months of haggling, scientific tools group Oxford Instruments (OXIG) picked the day of its half-year results to confirm a cash approach for scientific cameras company, Andor Technology (AND) - worth about £160m, or 500p a share. Oxford's earnings would benefit, but reaction has been mixed and Andor is "disappointed" at the timing of the "premature" announcement. Still, business is tipped to improve in the second half and Oxford's share price soared as much as 14 per cent on the news.
This, however, is not a done deal. Oxford has to finalise due diligence, win over Andor's board and beat off possible competition from overseas. Some shareholders are urging Andor to reject the approach, yet an exit multiple of over 13 times enterprise value to cash profits and a forward PE ratio of 23 looks generous. Of course, Andor would certainly give Oxford a shot in the arm. After a slow start to the year and the end to two big contracts, organic revenue fell 8 per cent during the first half and underlying operating profit dropped £1.6m to £22m. Government-funded research is under pressure, too, and sales of machines into the high brightness LED (HBLED) market also fell. Still, there was a sustained recovery during the second quarter and the second half should be better than the first.
Broker N+1 Singer expects full-year adjusted pre-tax profit of £49.4m, giving adjusted EPS of 67.9p (from £48.2m and 67.4p in 2013).
OXFORD INSTRUMENTS (OXIG) | ||||
|---|---|---|---|---|
| ORD PRICE: | 1,386p | MARKET VALUE: | £790m | |
| TOUCH: | 1,385-1,390p | 12-MONTH HIGH: | 1,775p | Low: 1,204p |
| DIVIDEND YIELD: | 0.8% | PE RATIO: | 33 | |
| NET ASSET VALUE: | 247p* | NET CASH: | £32.2m | |
| Half-year to 30 Sep | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2012 | 171 | 16.3 | 20.0 | 3.05 |
| 2013 | 166 | 17.7 | 23.2 | 3.36 |
| % change | -3 | +9 | +16 | +10 |
Ex-div: 5 Mar Payment: 7 Apr *Includes intangible assets of £84.1m, or 148p a share | ||||
